Amtrak, Postal Service Face Post-Sept. 11 Financial Woes

The events of Sept. 11 and the subsequent round of anthrax attacks have left two American institutions — Amtrak and the U.S. Postal Service — knocking on the door of Congress for emergency funding.

But have these debt-embattled, quasi-governmental agencies finally worn out their welcome with those who control the money on Capitol Hill?

In November, a panel charged by Congress to make recommendations on the fate of Amtrak said it should be liquidated, arguing the organization has squandered billions of tax dollars with a business plan that doesn't work. Currently $3 billion in the red, Amtrak has 90 days to come up with a plan to liquidate the operation as a result of the non-binding vote by the congressionally appointed Amtrak Reform Council.

But sources said liquidation seems far-fetched at this time, considering no one on the council or in Congress wants to get rid of the national rail system. In fact, there has been some movement to fund Amtrak for another $35 billion over the next five years.

So even as the council considers plans to streamline Amtrak — including the possibility of bringing in competition — Congress will probably go through with a multi-billion dollar, five-year authorization plan.

"You have a lot of people in Congress, who despite the vote from the reform council, are in no hurry to see Amtrak liquidated," said Andy Davis, spokesman for Chairman Ernest Hollings, D-S.C. and chairman of the Senate Transportation Committee.

Amtrak first boasted it was gaining ridership in the post-Sept. 11 travel environment, and suggested it might need additional money to keep up with new security concerns and gradual erosion on its Northeast corridor rail lines.

But it has since been revealed those numbers were based on call-in reservations rather than actual riders. Ridership has actually declined in September and October this year, compared to the same months in 2000.

Deirdre O'Sullivan, a spokesperson for the council, said Amtrak isn't charged with turning a profit, but it is expected to break even. But that has never happened, even when Congress charged them in 1997 with becoming self-sufficient by 2002.

That's why O'Sullivan and others believe Amtrak needs to be overhauled, putting many of its maintenance responsibilities under a new government agency.

"We came to the conclusion that Amtrak was broken and couldn't be fixed. We gave them billions, they've spent it and they have noting to show for it," said Paul Weyrich, vice chairman of the council and a vocal Amtrak critic. "That's not a mandate to discontinue the national rail system. We just need to start over."

Amtrak Vice President Jim Schulz said there is no credible evidence the operation is less efficient than any other private enterprise. But he agreed the company is due for an overhaul, and should be released from its burdensome maintenance tasks.

"In terms of both operational needs and capital investment, some rational, coherent and integrated policy needs to be presented for passenger rail service in this country," he said. But to think that it will not include government funding is unrealistic, he added.

Postal Service: Mixed Messages

Meanwhile, the U.S. Postal Service is asking for billions to buoy its own financial woes: the agency is $1.6 billion in debt and has been hit hard by the anthrax episodes.

But critics said that even without its recent troubles, the institution is an antiquated bureaucracy that cannot compete with private competitors, and shouldn't be kept on life support by the government.

At the beginning of the year, the postal service announced projections for a $480 million shortfall for fiscal year 2001, which ended Oct 31. Just last week, blaming Sept. 11 and the downturn in the economy, officials predicted $1.6 billion of debt in 2001, and expects a $1.8 billion deficit for 2002.

Postal Service spokesman Gerry Kreienkamp said the deficits are the result of the recession, upcoming labor contracts, lower volume of mail and the expensive irradiation equipment the agency purchased during the anthrax scares. It is asking for several billion from Congress to make it through the year and $1.1 billion to make it until June, he said.

It is not clear when Congress will take up the funding request. According to the House Appropriations sub-committee on the Treasury, Postal Service and General Government, there has been no formal request made to Congress.

To Kreienkamp, it is a double-edged sword. On one hand, the USPS ensures anyone, anywhere, can send and receive mail at a universal price. But the agency cannot raise prices or issue discounts when necessary, like its private competition, without lengthy congressional approval. Instead, he said, it goes into debt.

"Last year we had 1.7 million new addresses to serve; we had 55 new delivery points of service a day. We go to every household whether they pay for it or not. Would a privatized post office maintain that service?"

The Postal Service does not receive federal tax dollars. Nor should it, say critics. If Congress starts bailing out the USPS, its problems are bound to get worse.

"What a private business does is they try to cut costs internally — in the government, at Amtrak, in the postal service, nobody cares, they don't cut costs. They just raise our taxes when they want to spend more," charges Lew Rockwell, president of the Center for Libertarian Studies in California.

"A couple of years ago they were in surplus big time," Weyrich said of USPS. "They did not take the time to invest and could have preserved its profitability."

But sources say it is unlikely that Congress is going to let either USPS or Amtrak down for funding or emergency aid.

"That's the tragedy of this, they don't want to face reality, they don't want to face what needs to be done," complained Weyrich.